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                                                                    Exhibit 10.3

               Kitty Hawk, Inc. - 2004 Leadership Performance Plan

                                  Plan Summary


o        A variable compensation incentive plan for selected eligible management
         employees

         o        A pool of available dollars is funded based on the Company
                  achieving certain financial performance. A portion of the pool
                  is non-discretionary that is paid out to individuals based on
                  the Company's financial performance and a portion of the pool
                  is discretionary that is paid out based on individual
                  performance

o        Annual Plan with a Mid-year Progress Payment

o        Annual Payout Pool based on achieving Annual Leadership Plan Pretax
         Income

         o        Threshold     50% of Leadership Plan Pretax Income

         o        Target (Plan) 100% of Leadership Plan Pretax Income

         o        Maximum       120% of Leadership Plan Pretax Income

o        Annual Payout Pool calculated by multiplying Eligible Employees' Annual
         Salaries by Annual Eligible Employee Target Payout Percentage
         multiplied by Annual Financial Performance Percentage

o        Annual Eligible Employee Target Payout Percentage

         o        CEO                           60%

         o        Executive                     50%

         o        Director                      30%

         o        Manager                       15%

         o        Supervisor                    7.5%

         o        Individual Contributor        7.5%

o        Annual Financial Performance Percentage

         o        Threshold                     50%

         o        Target                        100%

         o        Maximum                       150%

         o        Below the Annual Leadership Pretax Income Threshold,
                  the Annual Financial Performance Percentage is 0%.


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               Kitty Hawk, Inc. - 2004 Leadership Performance Plan

                             Plan Summary - (cont'd)


o        Mid-year Progress Payment Pool set at a flat 33% of the Annual Payout
         Pool for achieving or exceeding `Target' Leadership Plan Pretax Income

         o        Mid-year Progress Payment Pool set at a flat 25% of the
                  `Target' Annual Payout Pool for achieving Mid-year `Threshold'
                  Leadership Plan Pretax Income

                  o        If Mid-year Leadership Plan Pretax Income is less
                           than `Threshold', then the Mid-year Progress Payment
                           Pool will be 0

         o        Actual Mid-year Progress Payment Pool will be subtracted from
                  final Annual Payout Pool

                  o        Mid-year Progress Payment is non-recoverable should
                           Annual Leadership Pretax Income be insufficient to
                           meet an Annual Threshold level

o        Individual Employee Payout calculated by multiplying Employee Salary by
         Annual Eligible Employee Target Payout Percentage by Award Metric
         Allocation

o        Award Metric Allocation

         o        75% - non-discretionary - based solely upon achieving the
                  financial results

         o        25% - management discretion except for CEO and Executive
                  Officers

                  o        CEO - Compensation Committee recommendation/Board
                           approval

                  o        Executive Officers - recommendation to Compensation
                           Committee by CEO/Board Approval

                  o        Unused discretionary amounts can be redeployed to
                           other Eligible Employees within same direct reporting
                           structure as approved by CEO and CFO and consistent
                           with guidelines developed by the VP Team Resources -
                           ex. CEO can redeploy unused portion of discretionary
                           amount to his direct reports

                           o        Maximum Leadership discretionary allocation
                                    cannot exceed twice the discretionary
                                    standard dollar amount available to the
                                    Eligible Employee - ex. Based on a 25%
                                    management discretion Award Metric
                                    Allocation, a particular Eligible Employee
                                    could receive a discretionary $1,200. The
                                    maximum discretionary amount this particular
                                    Eligible Employee could receive would be
                                    twice $1,200 or $2,400


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               Kitty Hawk, Inc. - 2004 Leadership Performance Plan

   Economics - Pretax Income, and Annual Payout and Mid-year Progress Payment


o        2004 Annual and Mid-year Leadership Plan Pretax Income Threshold,
         Target and Maximum amounts will be set by the Board of Directors or by
         the Compensation Committee if delegated to it by the Board of
         Directors.

o        The Board of Directors, or as delegated by the Board of Directors to
         the Compensation Committee, can make adjustments to the financial plan
         targets for non-recurring or special items not contemplated at the time
         the financial plan was approved or for material changes in the business
         environment. The CEO and CFO will make recommendations for these
         modifications for consideration and approval prior to finalization of
         the Company's relevant 10-Q and 10-K.




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               Kitty Hawk, Inc. - 2004 Leadership Performance Plan

                  Proposed Rules for New Hires and Terminations


o        Employees hired after the start of a performance period are eligible to
         participate on a pro-rata basis.

         o        Payouts will be pro-rated for the number of days employed
                  during the performance period unless an exception is approved
                  by the Compensation Committee.

         o        Employees must be employed for at least 90 days of the
                  Mid-year and Annual performance period to be eligible for the
                  applicable Mid-year Progress Payout and Annual Payout.

                  o        Example 1 - An employee who starts on April 1st is
                           not entitled to a Mid-year Progress Payment but would
                           be entitled to a pro rated Annual Payout. Example 2 -
                           An employee who begins on October 1st, would not be
                           entitled to a pro-rated Annual Payout.

         o        Leadership Performance Plan is not an employee entitlement.

o        Employees must be employed on the last day of the performance period
         and on the date the Leadership Performance Plan payment is made.

         o        However, if an employee is terminated not for "cause", dies,
                  retires or becomes disabled during the performance period or
                  after the performance period but before the date of the
                  payment, he/she is eligible for a pro-rata bonus based on
                  actual performance during the performance period.

                  o        Payout will be pro-rated for the number of days
                           employed during the performance period.

                  o        Leaves of absences will be prorated from Mid-year
                           Progress Payment and Annual Payout.

o        In the event of a Change in Control, employees will receive a pro-rated
         payout based on performance to date.

         o        Performance will be measured through the end of the month
                  prior to the consummation of the Change in Control relative to
                  the goals for the performance period.

         o        Bonus will be pro-rated for the number of days employed during
                  the performance period.

o        The Board of Directors, or as delegated by the Board of Directors to
         the Compensation Committee, has final authority in all matters
         pertaining to the interpretation, execution and modification of the
         Leadership Performance Plan.

         o        Payments made under the Leadership Performance Plan cannot be
                  made if they violate any Company contracts or laws and will be
                  made in cash net of applicable withholdings.



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               Kitty Hawk, Inc. - 2004 Leadership Performance Plan

                                    Mechanics

Mid-year Progress Payment

o        Mid-year Progress Payment made as soon as possible after finalizing
         Kitty Hawk 2nd quarter 10-Q - mid-August.

         Steps

o        CEO and CFO makes recommendations to Compensation Committee for
         adjustments to calculate Leadership Plan Pretax Income, and reviews
         with the Compensation Committee the Leadership Pretax Income and
         Mid-year Progress Payment calculations - Target 3rd week in July.

         o        Leadership Pretax Income and Mid-year Progress Payment
                  calculations reviewed by the external auditor - Target 4th
                  week in July.

o        Compensation Committee, or CEO and CFO at the direction of the
         Compensation Committee, makes recommendation to the Board of Directors
         for adjustments to calculate Leadership Plan Pretax Income, and
         approval of the Mid-year Progress Payment - Target 1st week in August.

         o        Board of Directors approves payout subject to Audit Committee
                  approval to file second quarter financial statements with the
                  SEC, such to be filed financial statements to reflect the
                  payout approved by the Board of Directors.

Annual Payout

o        Annual Payout made as soon as possible after finalizing Kitty Hawk,
         Inc. audited financial statements and filing of its 10-K - Late March
         or early April.

         Steps

o        CEO and CFO makes recommendations to Compensation Committee for
         adjustments to calculate Leadership Plan Pretax Income, and reviews
         with the Compensation Committee the Leadership Pretax Income and Annual
         Payout calculations - Target 2rd week in March.

         o        Leadership Pretax Income and Mid-year Progress Payment
                  calculations reviewed by the external auditor - 1st week in
                  March.

o        Compensation Committee, or CEO and CFO at the direction of the
         Compensation Committee, makes recommendation to the Board of Directors
         for adjustments to calculate Leadership Plan Pretax Income, and
         approval of the Mid-year Progress Payment - Target 3rd week in March.

         o        Board of Directors approves payout subject to Audit Committee
                  approval to file second quarter financial statements with the
                  SEC, such to be filed financial statements to reflect the
                  payout approved by the Board of Directors.



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